1. Fixed Index Annuities:
Lower Risk for Savers,
Economic Opportunity for Broker-Dealers
Wade Dokken
wade@wealthvest.com
April 14, 2010
TABLE OF CONTENTS
Executive Summary ................................................ 2
Fixed Index Annuity Sales Growth ...................... 4
Fixed Index Annuities Sold Away ........................ 5
FINRA 05-50............................................................ 6
Selling Away Revenue Loss ................................... 7
Fixed Index Annuity Performance....................... 8
Variable Annuity Performance............................. 10
Fixed Index Annuity Sales Future ....................... 14
WealthVest Marketing Advantage........................ 18
Product Introduction Addendum………………………20
Real World Returns ................................................ 23
WealthVest
Marketing
Producer
Use
Only
April
14,
2010

2.
Executive Summary
1. Fixed Index Annuities (FIAs) represent the greatest potential source of independent
broker-dealer future profitability. Sales in FIAs have grown 600% over the past decade, while
variable annuity sales have declined 28% from their levels a decade ago. Variable annuity sales are now
50% lower than they were at their peak. Sales in FIAs are almost exclusively sold by traditional
independent broker-dealer registered reps and insurance agents, who are securities licensed. FIA sales
through registered reps are estimated to equal $20 billion, which at the high range amounts to 40% of
current VA sales through independent broker-dealer registered reps.
2. FIA sales are now disproportionately sold away from the broker-dealer. ING, a major
writer of FIAs, claims that 85% of its FIA sales are written by advisors with series 6 or 7 licenses, and
only 20% of their sales are written through broker-dealers. Annuity Specs, the principal index annuity
research service, calculates that 2.5% of index sales are written through broker-dealers and another 8%
through banks. However, it is assumed that most of the agency-written index sales are actually written
by insurance agents holding a securities license. This is in contravention of FINRA 05-50 directions for
broker-dealers to supervise the sales of FIAs. SEC proposed rule 151A is implicitly designed to interpose
broker-dealer supervision on the sales practices of errant advisors.
3. NASD Notice to Members 05-50. This August 2005 notice to members leaves little doubt that the
NASD strongly desires member firms to supervise the sale of unregistered Fixed Index Annuities. The
notice also calls for greater supervision of compliance, marketing, sales presentations, and suitability
and requests that this business be written through the member firm. In conversations with Joe Savage,
FINRA, it is also clear that FINRA believes all FIA sales where registered products represent the source
of funds, should be supervised. States are also beginning to enforce source of funds
regulation.
4. Selling away represents a substantial loss of revenue for broker-dealers, in addition to
the potential sales practices liability of unsupervised sales. It is estimated that FIA selling
away currently represents a lost commission opportunity of $1.154 billion for independent broker-
dealers. Furthermore, assuming a net retained margin of 15%, FIA selling away amounts to a $173 million
net retained commission loss for independent broker-dealers.
5. Fixed Index Annuities have superior product performance and risk management
features. Fixed Index annuities have evolved into products that broker-dealers can be
proud to sell, and in this respect, consumer preferences have out-paced broker-dealer
comprehension of the fixed index annuity product set. Previous product features have been discarded,
contributing, at least in part, to the decline in Commissions to an average of 6.24% in the 3rd quarter of
2009. As interest rates increase, all elements of the index annuity product gain a competitive advantage.
The equity market participation rises, and the fixed rate alternative increases. The most popular FIA
products for financial advisors commonly carry total fees of 150-200 basis points and historically
generate total returns in the 5-6% range, which will in all likelihood also rise as interest rates climb.
6. Alternatively, variable annuities have evolved into increasingly expensive delivery
vehicles for equity market performance. Prudential and Jackson National, to name only two of
the leading variable annuity sellers, derive a large percentage of their variable annuity sales via a series
of options and funds that can cost investors 4.00% or more. These options also require that assets be
allocated to 20-30% in bonds and cash. According to Dr. Jeremy Siegel, this asset allocation blend
should result in total returns below 8%. Thus, today’s most popular variable annuities seem to be
designed to provide total returns in the high 3% or very low 4% range, all the while exposing investors to
much of the systemic risk of the U.S. stock market. The market is cognizant of these product versus
performance contradictions, and as a result, new money as a percent of overall variable annuity sales
have fallen to 14% of sales, while variable annuities have fallen 28% below their level over a decade ago.
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3.
7. Market forces will continue to drive investors and firms to more guaranteed
investments. This BD revenue loss will intensify in the coming years as FIA sales
continue their market share growth pattern.
a. The past decade of market underperformance is rapidly altering Americans’ savings habits,
shifting their preferred savings vehicles from equity-based to more guaranteed rate savings
vehicles.
b. The ‘Great American Bull Market” in bonds has ended and will soon be replaced by an
extended secular bear market in bonds. Unfunded American Medicare and Social Security
costs are pushing up public expenditures. Economic stabilization costs, the war debts, and
stimulus costs all suggest an expansion of bond yields in the coming years. High nominal
rates suppress equity valuations and shift savers to guaranteed rate products (such as fixed
and fixed index annuities).
c. American demographics for the purchase of fixed annuities will double in the coming years
as baby-boomers reach the peak annuity purchasing age. All other factors being equal, fixed
annuities are poised to double, firmly supplanting variable annuities in Americans’ savings
preferences.
8. Against these consumer preferences and demographic and economic backdrops,
WealthVest Marketing can help you capture nearly 100% of your FIA business.
a. Wade Dokken & Lincoln Collins founded WealthVest Marketing. They were founding
members of the American Skandia management team and CEO & COO respectively. Lincoln
Collins was also CEO of Hartford Life Europe. American Skandia grew from its inception in
1988 to the largest selling variable annuity in the U.S. in 2nd quarter of 2000, gaining some of
the highest Market Metrics scores in product innovation, wholesaling and key account
management.
b. WealthVest Marketing’s team includes sales management, key account management and
30+ field wholesalers, internal wholesalers, customer service, operations and marketing to
provide dedicated product and sales support to fixed and fixed index annuities for broker-
dealers.
c. WealthVest Marketing believes that FINRA 05-50 and the SEC 151a initiatives clearly direct
broker-dealers to actively supervise fixed index annuity sales, and the source of funds for
fixed index annuity purchases.
d. We believe that you may conservatively assume current FIA sales to amount to 40% of your
variable annuity sales. Assuming you presently capture the 2.5% average, your increase
would thus correspond to a 47% increase in commission revenue. The gap between your
existing FIA sales and this derived number measures the lost commission opportunity of your
firm. Overnight, you can gain commission revenue amounting to 47% of current variable
annuity commission revenue.
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4.
WealthVest IBD Fixed Index Annuity Strategy
1. Fixed Index Annuities (FIAs) represent the greatest potential source of
independent broker-dealer future profitability.
The next several pages represent the single largest profit opportunity for your firm today. Fixed Index
annuities are currently the fastest growing segment of the annuity business. FINRA and the SEC are both
taking steps to require broker-dealers to supervise FIA sales. These products are increasingly becoming
the best consumer value in the annuity marketplace. We can show you how to increase your net retained
revenue by $450,000 (assuming a 15% net BD margin) for every $100 million in current variable annuity
business written.
Most importantly, we believe variable annuity sales will continue to decline, while fixed index annuities will
continue to grow. Either this revenue opportunity will increase for your firm—if you take action—or the lost
revenue will expand as variable annuities decline and fixed index revenue is not retained by your firm.
This profit maximization does not require changing the product biases of your registered reps, who can
continue to sell the current mix of stocks, bonds, mutual funds, and variable annuities. Gains are made
possible by capturing index annuity business currently not sold through your firm.
Most importantly, by gaining a certain degree of control over this burgeoning insurance product, you can
add $2-3 million of enterprise value to your firm for every $100 million of current variable annuity business
written. We have included a spreadsheet that allows you to customize these calculations for your own firm,
assuming a 6x multiple on the profitability for a broker-dealer.
The lost commission box represents the assumed total FIA sales “written away” from the
broker-dealer multiplied by an assumed average commission of 6.34%, which is a recent
average from Annuity Specs, the leading Fixed Index Annuity research organization. In
spite of broker-dealers attempting to gain supervision over fixed annuity index sales, the
vast majority of production in the IBD channel remains outside of the BD.
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5.
2. FIA Sales are now disproportionately sold away from the Broker Dealer
We currently believe that market forces are reversing variable annuity sales and that the tremendous
nominal sales growth of variable annuities will be replaced by fixed index annuities. Variable annuities
sales are currently 50% of their peak values, while Fixed Index sales are up 600% from 10 years ago. We
each have 25 years of broker-dealer experience, and we believe our approach can protect our broker-
dealer customers’ financial integrity.
Billions
of
Dollars
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6.
3. NASD Notice to Members 05-50 creates a compelling reason for broker-
dealers to fully supervise FIA sales.
This August 2005 notice to members leaves little doubt that the “then” NASD strongly desires member firms
to supervise the sale of unregistered Fixed Index Annuities. The notice also calls for greater supervision of
compliance, marketing, sales presentations, and suitability and requests that this business be written
through the member firm.
“This Notice to Members addresses the responsibility of firms to supervise the sale by their associated
persons of equity-indexed annuities (EIAs) that are not registered under the federal securities laws…”
Supervision under Rule 3030 and Rule 3040
“Many firms assume that EIAs that are not registered under the Securities Act are insurance products and
not securities. These firms treat the sale of unregistered EIAs by associated persons in their capacity as
insurance agents as an outside business activity under Rule 3030, beyond the mandated purview of the
firm’s supervision. Rule 3030 does not require that the firm supervise or even approve an outside business
activity, although a firm may choose to deny or limit the ability of associated persons to engage in the
activity. Rule 3030 simply requires that an associated person promptly notify the firm in writing that he is
engaging in a business activity outside the scope of his relationship with the firm…”
“Firms are encouraged to consider whether other supervisory procedures also might help protect the firm’s
customers. For example, a firm could require that all sales of unregistered EIAs occur through the firm. If an
associated person is selling the unregistered EIA through the firm, the firm must supervise the marketing
material, suitability analysis, and other sales practices associated with the recommendation of unregistered
EIAs in the same manner that it supervises the sale of securities…”
We interviewed Joe Savage’s regulatory staff for this paper. The opinion of the general industry and
specifically FINRA’s staff is that the SEC will continue to request these products be regulated as securities.
Further, FINRA expects to continue to place attention on the “source of funds” for the purchase of Fixed
Index Annuities. FINRA communicated that if a registered product is sold to facilitate a FIA purchase, the
entire transaction should be a supervised activity.
State Regulation
Already Arkansas has indicated that insurance agents who sell a fixed or indexed annuity as part of the
replacement of securities products (such as variable annuities and stocks) must be licensed as a registered
representative.
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7.
4. Fixed Index Annuity Sales are Booming
Fixed index annuities have been on a steady upward trend for the past decade, with one brief exception.
The combination of principal protection they provide coupled with the opportunity to allow market
performance to enhance interest rates have proven very attractive to American savers.
Over the past decade, FIAs have grown from $5 billion annually to over $30 billion in 2009. It is estimated
that index annuity sales now represent nearly 50% of variable annuity sales; a ratio that was once
approximately 7:1 nationally is now only 2:1 in the IBD channel.
Many financial planners derive a disproportionate percentage of their incomes from the recommendations
of this product to their customers.
At the same time, Variable annuities have collapsed from a high of $180 billion annually to $98 billion in 2009.
Variable annuity sales are now 20% less than they were in 1999, while index annuity sales are 600% greater.
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8.
5 & 6. Fixed Index Annuities have superior product performance and risk
management features.
They possess a core set of product characteristics that allow them to achieve superior investment results in
today’s market and the years to come, including:
1. Low fee chassis
2. Low risk strategy
a. High Fixed Return Option
b. Guarantee of principal—always
3. Low cost for enhanced income benefits
4. Flexible choices between fixed income and equity market participation
5. Sensible commission levels
In short, the reality of the Fixed Index Annuity product line is that is deviates greatly from the perceived
Fixed Index Annuity product line.
The average commission today is 6.34%, and the most progressive products are moving to surrender
charges in the 5-8 year duration range. Increasingly, FIA investors are allowed a series of equity market
indices for their investment
choices. Guaranteed income
options—the driving force
behind variable annuity sales
today---are 25-50% of the cost
of similar guarantees in
variable annuities.
The core product features of
Fixed Index Annuities have
evolved to become far superior
to their historic features, and
now represent a lower risk,
lower expense alternative to
variable annuities. In fact, in
many market cycles, they are
not only lower risk—they are
higher return.
The difference is simple;
variable annuities, with their
complete exposure to the
volatility of equity markets,
create an insurance company
risk that must be priced.
Variable annuity companies
failed to adequately
comprehend these risks prior
to 2008 and paid a severe
penalty. The loss in insurance
company market capitalization
and earnings has resulted in
universal reductions in income
benefits and increases in
benefit costs.
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9.
Today, we find a market where variable annuities have become more expensive and less
attractive to consumers.
While index annuities have been lowering commissions, lowering spread fees, and shortening surrender
periods, variable annuities have trended in the opposite direction.
Today the variable annuity market leaders have mortality and expense fees of 1.85%. The underlying
mutual fund fees average between 100 and 150 basis points for the most popular asset classes. The riders
can be expressed as 70-90 basis points, but this pricing level depends upon the performance of the
underlying sub-accounts. If they decline, then the real cost of the riders may well be 120 or 150 basis
points.
These facts mean that the most popular variable annuities can now have total fees of 375
to 425 basis points.
When this is compared to our core index annuities, the differences could not be more striking. The best-in-
class index annuities today have “spreads,” a term referring to the total management fee between the
underlying assets’ performance and the net return to the investor. These spreads most commonly range
between 150-200 basis points. Index annuities are not registered with the SEC, so these fees are not
prospectus disclosed; nevertheless, these are the real pricing assumptions that underlie the products.
Thus, the differences are routinely 200 basis points between index annuities and variable annuities, and in
extreme cases, a net difference of 300 basis points exists. Over the course of the last 12 years or so,
variable annuities fees have consistently been increasing, while the surrender charges, surrender period,
commissions and the “spread” on fixed index annuities have all been declining.
Fixed index annuity fees are commonly lower, and hence, their risk-adjusted returns are higher. Overall fee
differences of this magnitude can only mean one thing; over extended periods of time, when the asset
classes are approximate or a match, the higher fee product will substantially underperform the lower fee
products.
Ultimately, our business model—yours and mine—is not simply the delivery of superior service and advice,
but also depends upon superior investment returns. Variable annuities, often offering quite similar core
investor benefits and experiences, have evolved into highly expensive delivery vehicles for equity market
participation.
Today, fixed index annuities are commonly a better deal for consumers.
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10.
Let’s look at the basic assumption around a prospective advisor’s expected rate of return.
We reveal two substantial biases to variable annuities in this analysis. Most importantly, we have assumed
that the next period of time (which we believe will be defined by higher interest rates) will continue to
average the long term equities market average rate of return. However, the markets could easily
underperform the long term trend-line.
Second, and equally as important, is the concept of systemic risk. The risk of this portfolio far exceeds the
risk of a fixed index annuity. The best designs in fixed index annuities allow you to lock in each month’s
gains—or each year’s gains—and protect those gains from subsequent retreats in future down years.
“Real World Returns,” the October 5, 2009 Wharton study on Fixed Index Annuities, clearly proves that the
product and the value of the benefits are consumer friendly and financially compelling.
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11.
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12.
Wharton’s key findings are that fixed index annuities performed 103 basis points above fixed annuity yields,
and assuming that previous calculations of gross variable annuity fees are correct, fixed index annuity
could thus easily outperform variable annuities on a consistent basis.
One of the core selling features of variable annuities today---the income benefits and the
income withdrawal features—are generally superior in FIA products and they are less
costly. Consider these examples:
• 7.50% guaranteed income withdrawal feature for 50 basis points from leading provider
• 7.00% guaranteed income withdrawal feature for 40 basis points from leading provider
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13.
7. Market forces will continue to drive investors and firms to more
guaranteed investments. This BD revenue loss will intensify in the coming
years as FIA sales continue their market share growth pattern. Fixed Index
Annuities have design features that are very attractive in a rising interest
rate environment, or a “sideways” equity market.
The key positioning of Fixed Index Annuities, is that they allow a low risk (fixed annuity) strategy, which
allows the credited interest rate to be supplemented by equity market returns. Fixed Index Annuity
performance characteristics do not match equity market performance in bull markets, but their lack of bear
market participation, can make their average returns very attractive in specific market environments. This
low risk strategy that can deliver returns superior to traditional fixed annuities is highly appropriate for low-
risk savers.
Additionally, market environments marked by higher interest rates can benefit savers in two important
facets. First, as interest rates increase, our investors can choose not to divert their fixed returns into market
indices and can receive the stated interest rates of a contract. As interest rates rise, this can be an
attractive option.
Secondarily, as interest rates rise, P/E ratios tend to fall. This can make for disruptive equity market
investment experience. Markets fluctuating between positive years and negative years can be very
traumatic for investors. However, fixed index annuities can allow savers to “lock-in” each positive year
and protect them from negative years. This downside protection is very attractive to risk averse savers and
as baby boomers age, their comfort with risk will likely decline.
Finally, the American Baby Boomers are now reaching their peak annuity purchasing years. Over the next
15 years, the key annuity buying demographic will nearly double. This change is occurring on the heels of
one of the worst stock performance decades of the past century.
Coupled with the expected rise in nominal rates for government and corporate bonds and the resultant rise
in fixed annuity rates, Americans will dramatically increase their participation in annuities. Simultaneously,
they are likely to liquidate their variable annuity holdings; yet, with longer retirements, pure fixed annuities
may prove lacking. This is where the hybrid fixed index annuity can create a most compelling investment
story.
We currently believe that market forces are reversing variable annuity sales and that the tremendous
nominal sales growth of variable annuities will be replaced by fixed index annuities. Variable annuities
sales are currently 50% off their peak values, while Fixed Index sales are up 600% from 10 years ago. We
each have 25 years of broker-dealer experience, and we believe our approach can protect our broker-
dealer customers’ financial integrity.
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14.
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The U.S. equity market has just experienced a vastly disappointing decade from the
perspective of investors, advisors, and broker-dealers alike. Many believe that our
suffering is far from over. A trading market creates performance advantages for Fixed
Index Annuities. Our American equities market, defined by the Dow Jones Industrial Average,
increased from 700 to 14,000 over the course of 25 years, between August 1982 and 2007. This amounts to a
20 times increase in market valuation. The growth in earnings explains roughly 1/3 of this wealth creation;
however, 2/3 of this wealth creation can be attributed to P/E expansion. Between 1981 and 1999, the U.S.
equities market appreciated a compounded 13.8% per annum in real terms---approximately a 165% premium
over the long-term (1802-2008) average for equities.
During this period, P/E ratios expanded from 7 times earnings to 21 times earnings. Today, they stand at 15x
earnings. Although this P/E ratio is only slightly above the long-term average, this is against a backdrop of
historically low interest rates. More important is the fact that historic averages are based upon interest
rates 400 basis points above today’s United States 10-year government bond.
My friend, Dr. Jeremy Siegel, author of “Stocks for the Long Run,” clearly articulates the power of equities
in a personal portfolio over long periods of time. The 206-year real return running average now stands at
9.00%. However, this average includes periods of P/E expansion and P/E contraction.
A casual observer of our markets must conclude that we are fundamentally more likely to find ourselves in a
period of P/E contraction than P/E expansion for two reasons. Most important is the likelihood of a rise in
interest rates, as echoed by Bill Gross and other bond investors. Rising interest rates increase the discount
rate of future profits, thus driving down stock market returns generated from the P/E multiple effect.
We may also face a prolonged period of lower household demand for equities. The American investor
psyche has been severely damaged by the past three years of equity market participation. When this
experience is superimposed on the last decade of investor experience, the total return in the equity markets
amounts to negative .5% annually, compounded for ten years.
This is not dissimilar to the 1966 to 1981 period in the U.S. equity markets. Stock indices reached 995 in
February 1966, and they vacillated during this period of time, not reaching 1,000 again until November 1972.
What followed was a period of rising interest rates and collapsing P/E ratios. The U.S. 10 year government
bond yield rose from 4.82% in 1966 to 13.80% on December 15, 1980. The P/E ratio of the U.S. stock market
fell to 7x earnings, before a rebound began in 1982, and stocks reached 1,100 in February 1983. Although the
earnings of the S&P 500 rose by 2.5x, the valuation of the U.S. stock market failed to increase. Most
damaging of all, the U.S. equity market experienced annual compounded real returns of -0.41% per year
from 1966 to 1981.
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16.
Rising interest rates and collapsing P/E ratios.
Americans’ reactions to these investment markets—in retrospect—was not difficult to predict.
Overwhelmingly, Americans moved their money to fixed income securities (bonds and annuities), and
shunned equities and equity mutual funds. The U.S. equity mutual fund market experienced net
redemptions from 1971 to 1982 each year.
Today, we face a world where our core products, variable annuities, mutual funds, and managed accounts,
all rely disproportionately on equity market performance in the 9-12% range. This level of return above
fixed income returns allows us to pay for the advisory fees, preferred vendor programs, and commissions
which fuel our businesses.
However, if you believe, as Bill Gross suggests, (Dow 5,000) and higher interest rates, then we must
consider what the impacts to our business model in an environment of 6-10% U.S. ten year bonds are. We
believe investor sentiment will focus upon the high nominal rate of fixed income. As stated earlier, we also
believe these higher nominal rates will accompany lower P/E ratios, thus creating a very negative
environment for stock mutual funds or variable annuities.
The developed world debt has emerged as the greatest potential threat to sustained GDP growth. The
substantial consumer debt overhang, principally due to The housing debt, and the continued expansion of
unfunded entitlement liabilities—at the state and federal level—not only threaten our ability to spark
consumer growth, but at the predicted future level, they are widely expected to suppress long-term growth
by up to 1% annually (against an average of 3% expected growth.)
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17.
Although, we seek not to predict the actual direction of interest rates, both the preceding chart, which
shows the build-up of America’s total debt burden prior to the recession, and the following chart which
shows the decline of bond yields since the peak in 1981, suggest that America’s current secular bull market
in bonds has reached its end.
America’s aging population and their implicit strains on the U.S. Social Security system and our Medicare
system will exert significant pressure on U.S. interest rates and by extrapolation, the U.S. dollar. These twin
demographic towers have been foretold by numerous authors—notably Pete Peterson, in “Will America
Grow Up before America Grows Old,” and the time of reckoning is now. Our trade deficit—a function
largely of our oil imports and our consumer spending will further exert upward pressure on interest rates.
Finally, America’s ability to move to a federal balanced budget, which is dependent upon a reduction in war
costs, current stimulus spending, and a political will to find a balance between revenue and expenses,
remains unknown—and evidence of the past 50 years suggests the political will is lacking.
So, an environment of rising interest rates, and falling P/E ratios creates an environment of high risk for a
pure equity portfolio and as Americans move to higher nominal yield securities, additional pressure is
placed on lower fees and higher yields. We believe this is a terrific environment for a fixed index annuity
and this is the opportunity before us.
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18.
8. WealthVest Marketing Advantage
Against this remarkable backdrop of financial advantages for the broker-dealer, the consumer, and the
timing of the current stock and bond markets, we strongly believe that variable annuities will be replaced by
fixed index annuities as a dominant product in a higher interest rate environment.
We believe that the most progressive broker-dealers will embrace the consumer friendly aspects of the
fixed index product line.
We also believe the best approach is a proactive product training, field wholesaling model, in which you
take the initiative and help drive further positive consumer favorable features, commissions, and
guarantees.
WealthVest Marketing believes that we are the partners to help you lead the independent broker-dealer
industry into a positive relationship with fixed index annuities.
Lincoln and I were among the founders of American Skandia, a variable annuity company that commenced
sales in 1988 and had developed into the largest writer of variable annuities in the United States by 2000.
The market for variable annuities was $7 billion in 1988, and had grown to $150 billion by 2000, which is a 20x
increase in sales. Our relative market share growth was attributable to three core concepts.
We eventually became the CEO and COO of American Skandia, prior to our sale to Prudential Insurance. It
was this platform that allowed Prudential to leverage its financial clout and additional development and
again grow the acquired company into the largest seller of variable annuities in the United States.
1. First, we built a wholesaling force, which, according to third party analysis, was often regarded as
a pre-eminent team of investment sales coaches for financial advisors.
2. Second, we embraced the rapidly changing sentiment on asset managers. We actively managed
our portfolio of managers, seeking constantly to offer the best managers for specific asset classes,
and secondarily, facilitating the availability of no-load managers for the professional advice
community.
3. Finally, we placed a disproportionate level of our sales, marketing, and product development
resources into the independent broker-dealer channel. Our sales strategy, pricing, and product
design decisions reflected the preferences of this nascent—now dominant—approach to client
needs and desires.
We believe the same opportunity to change the product and product distribution model at a fundamental
level once again lies in the area of fixed index annuities.
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19.
WealthVest Marketing accomplishes these substantial economic benefits to your firm via
six unique strategies:
1. We work exclusively with the broker-dealers to ensure that all of the fixed index annuity business
currently being written by your advisors is written through your firm in strict accordance with FINRA
05-50. This strategy automatically allows you to increase your commission revenue from the fixed
index annuities currently written away from your firm.
2. We build a preferred vendor program so that your firm can enhance its revenue—either above the
street commission level, or, depending upon your contract with the advisor, simply at a higher
commission, of which you receive a pro-rata share. We believe the most progressive broker-dealers
are seeking to convert this program into an AUM program, which will create the greatest long-term
enterprise value for the firm.
3. Unlike other companies today, we have a dedicated field wholesaling organization. We have
employed 32 field wholesalers, making us the largest index annuity specialty-wholesaling firm. We
expect to build this sales force to over 40 by the 2nd quarter, and we will continue to expand
throughout 2010 and 2011. Our plan is to add substantially more value to broker-dealers than any of
our competition. Our wholesalers have, on average, 14 years of field experience and over 11 years of
annuity experience. They will simultaneously enhance your advisors’ sophistication—and they will
expel the message of firms attempting to “sell away” and damage the profitability of your firm.
4. We can create selling agreements between most of the major fixed index companies and your firm,
permanently interposing the broker-dealer into the commission hierarchy. You will still make all
product approval decisions, but this procedure is the only way to track your advisors’ FIA activity
with certainty. They can no longer “sell away” once you are in the commission order.
5. WealthVest has built a key account management group, a product management group, an internal
wholesaling group, and a customer service group. Our company is built around annuity wholesaling
models like Wood-Logan and Planco. Specialty companies dedicated to innovative product where
the distribution skill or capacity does not reside in the underwriting life company.
6. WealthVest Marketing has added a broad portfolio of value-added services to help the advisor
succeed in today’s competitive environment. We can customize these for specific broker-dealers.
a. Proprietary Lead Generation Program
b. Proprietary Radio Show with FINRA approved scripts
c. WealthVest Coaching program
d. Peter Montoya Marketing Library
e. Website Development
f. Professional Seminar Programs
g. Mastering Public Relations
h. Wealth2K Proprietary Web Lead Generation Presentation
i. Ron Carson’s Peak Academy
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